New Millennium, New Funds

B.E. finds 12 of the best bets for the new year-and beyond

12 funds who hasn’t managed an existing fund. However, he has served as the director of research for Harris Associates, the Chicago-based advisor to the well-regarded Oakmark family. “Oakmark funds have a ‘buy list’ of about 100 stocks,” he says. “Each stock must be approved by a stock selection committee consisting of three members, and I’m one of them.”

Oakmark Select is another focused fund, holding between 15 and 25 stocks. “If you’re going to buy an actively managed fund,” says Nygren, “you want one that won’t act like an index fund. To us, that means offering a fund that holds a relatively few top investment ideas.”

Another incentive for investment: Nygren has placed most of his own assets in this fund, so he definitely intends to maximize performance. Additionally, Oakmark prides itself on investor communications: shareholders receive a personal answer to all e-mail sent to bnygren@oak mark.com.

In the small-cap arena, Dziubinski has two picks:
Baron Growth Fund (BGRFX). This fund recently changed its name from Baron Growth and Income Fund, representing a change in direction. “The emphasis now is on growth, not income,” says Morty Schaja, Baron’s COO. “We sold the majority of our high-yielding real estate investment trusts, for example.”

Schaja says that the fund will look for small companies capable of doubling or tripling their stock prices in four to six years. Obviously, that’s the goal of many mutual funds, but Baron Growth has some credibility here: Ron Baron, the fund manager and chairman of the company, also runs the highly successful, $6 billion Baron Asset Fund.

Artisan Small-Cap Value Fund (ARTVX). Manager Scott Satterwhite compiled an excellent record at Wachovia Special Values Fund, a leader among small-cap value funds. At Artisan, he has promised to close the fund once it reaches $400 million in assets, which should keep it from becoming unwieldy.

As for international funds, Morningstar lists two freshmen:
Longleaf Partners International (LLINX). The fund seeks to buy companies trading at less than 60% of intrinsic value, as determined by several proprietary algorithms. Like focused funds, holdings will generally range between 15 and 25 stocks. “We’re now finding the best values in Europe,” says Andrew McDermott, assistant portfolio manager, “although we started the year with more exposure in Asia. We also hold some Latin American and Canadian companies.” He says this fund actively hedges currency risk so that investors participate in the performance of the underlying companies, as reflected in U.S. dollars.

New World Fund (NEWFX). The emphasis here is on new-as in brand new. At press time, the fund had just completed its initial fundraising and had yet to announce its holdings. It’s an entry from American Funds, known for international expertise. As Dziubinski puts it: “awesome management, a deep team and low costs.”

Rounding out the roster is the solitary bond fund:
Third Avenue High-Yield Fund (TAHYX). Well, maybe not. Subject to shareholder approval, the fund is scheduled to become Pioneer High Yield to reflect new ownership. Marge Patel, the fund manager, already has been placed on the Pioneer payroll.
She expects to

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